Planning for Growth

This document discusses the key considerations for evaluating growth opportunities, evaluates opportunities for growth using Ansoff's growth vector matrix, assesses potential sources of funding available to businesses, and provides options and pathways for growth. It also includes a PESTEL analysis and discusses the benefits and drawbacks of different funding sources.

Planning for Growth

Table of content
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1. Key considerations for evaluating growth opportunities.................................................3
P2. Evaluate opportunities for growth by using Ansoff's growth vector matrix....................5
M1. Discuss the options for growth using a range of analytical framework..........................7
D1. Evaluate specific options and pathways for growth........................................................7
TASK 2............................................................................................................................................8
P3. Assess the potential sources of funding available to businesses and discuss benefits and
drawbacks...............................................................................................................................8
M2. Evaluation of potential sources of funding and justification for adoption of an effective
source....................................................................................................................................10
D2. Critically evaluate potential sources of funding with justified argument for the adoption
of a particular source............................................................................................................10
TASK 3 & 4...................................................................................................................................11
CONCLUSION..............................................................................................................................21
REFERENCES..............................................................................................................................22

INTRODUCTION
Planning refers to an activity and procedure of making plans and strategies to accomplish
desired aims and goals of an organisation. This act is important for each kind of company
because it assist in attain success and to fulfil consumers needs in effective manner (Akram and
et. al.,2016). In context of this written document, it consider Ella's Kitchen which makes organic
baby and toddler food and sold in supermarkets internationally. However they need to make
expansion in their market department by introducing new product like superfoods as a healthier
food product for baby. This assignment will discuss about various tools like PESTEL analysis
that could be utilise by the firm in context of find out the components that influence the
determination and plan of action of organisation to run its business in to marketplace. Moreover,
the report will define different sources of funds that can be utilise by firm to generate finance.
Finally, diverse ways will discuss through which company can accomplish growth in market.
TASK 1
P1. Key considerations for evaluating growth opportunities
The GE McKinsey Matrix is know as nine box matrix which is used as a strategic tool for
making business growth plan for the organisation. A business portfolio is set of business that
make up a company and these small business refers as a strategic business units ( SBUs). The
business plan are complex in nature and required deep knowledge of growing market and
appropriate strategies to enhance and grow its business from time to time (Sreedhar and et.
al.,2015). With the reference of Ella Kitchen, the top-levels management make business plan to
grow in present as well as coming years in market.
The GE McKinsey is used to analyse the small business units so that they make sound
investment decision-making. In this matrix, the attractiveness of market are presented on the y-
axis and small business units on X-axis. The results of the matrix is stated as that there are three
options available for grow of organisation (Smiley and et. al.,2015).
GROW OPTION: Here, company should invest in small business units as there are in
the grow stage. In the context of Ella kitchen, if company falls in the grow options them they
should invest in such business for further growth in the target marketplace. All the organisation
who are within this category, attract investment by organisation as the results they will bring

more returns on investment in the future. Here company can invest in the research and
development to study the market and capture the most profitable segment in the marketplace.
HOLD option: Under this option, business of the organisation is a unclear whether their
will grow in future or not (Qadri and et. al., 2015). Here further investment can be done after the
results of grow investment is seen in the business units by the companies. Under this stages ,
investment is done after putting the growth investment.
HARVEST option: Here investment is made to continue the business operation and
expanded its business in the different marketplace. Any poor performance of any business units
are eliminated and exist the market so that new entry of another business can be possible in the
marketplace (Pamuk and et. al.,2017). Company wants to invest into its business then it needs to
harvest by providing little investment and if it wants to expand its operation then it expand it
business by investing more in the activities.
PESTEL Analysis : A PESTLE analysis is used as a tool for identifying, analysing
macro-environment factor and see their impact performance and growth of organisation in
current as well as in future conditions. In context of Ella's kitchen, company uses this
framework as analytical tool to evaluate key element which can impact strategies for growth of
company in long run.
Political factors: Under this factor, it include tax policies, trade tariffs and fiscal policy
and etc, which influence the business decision of the company (Myronycheva and et. al., 2018).
As Ella kitchen operates at global levels and have to follow different government influence its
activities. For example, government can impose new tax which will generates new structure for
collecting revenues for the country.
Economic factor: Under this conditions, it include changes like exchange rate, interest
rates, inflation rate which have a huge impact on the purchasing power of the consumers and
change the demand and supply of the market conditions.
Social factor: here general environment represents the geographical characteristics,
culture and value which can impact on the growth of the company (Mize and et. al., 2015). As
Ella Kitchen, operates main-ling for baby product and services so it attract more child business
instead of capturing overall business unit present in the organisation.
Technological factors: It is important factor at present as new technologies keeps
approaches to the market. Ella Company make best use of advance technology to produce

goods and services& they can find the new way to distributes such goods in to target market.
Technology helps in reaching out to most people and communicated to larger number of
audience in target segment. This factor also help in examining weather to enter or not in the
particular marketplace
Environment factors: This factor is very important due to ever-increasing scarcity of raw
material which has impact on the production of the Ella kitchen. this factor also include the
weather ,climates which keeps on changing the requirement of the Ella kitchen from time to time
and business ethics and every company have different code of conduct (Maghfiroh, Subchan
and Iqbal, 2017). Company is working in the complex environment which can lead to difficult in
changing and adoring new approaches in management team.
Legal factors- The are various different rule and regulation which are to be taken into
consideration while performing business activities in the organisation . It include laws like
consumer protection law, health and safety,intellectual property and domestic trade regulation
and companies have to follow such law to enhance its production in the market and take
competitive advantages (Light, Wang and Gomez-Lobo, 2017). The company should follows
such laws so that business can be performed in legal regulation and save from paying extract
money to the concern law department.
P2. Evaluate opportunities for growth by using Ansoff's growth vector matrix
Ansoff matrix
It was established by Russian American Igor Ansoff in 1957, is a tool to identify, analyse
and plan their scheme for growth and it is also called market/ product expansion grid. This
matrix help leader and administrator to understand the risk of growth and development for longer
survival in the market.(Baral, 2015). Here the manager of an Ella's kitchen develops the
opportunity to increase the sales and revenues by using various methods of ansoff strategies
which can be described below.
Market penetration strategy- This process develops the idea of selling more existing
services or products to existing customers. The main objective of this is to maintain or increase
the market share of current goods and for this firm includes various ways of advertising,
personal selling, loyalty scheme and sales publicity.

Advantage- The benefits of market penetration is that it may create a customer referral
because the product contains similar quality with cheap price which attracts the customers to
purchase that product even in the competing market.
Disadvantage- the main drawback of market penetration is that a company cannot use the
low pricing strategy for a long period because at one point it faces the loss.
Product development - It is the process where a company have a good market share in
existing market and introduce the new products for growth. This emphasis more on innovation
and research & development for being first into the market to its specific customers (Kuzmanic,
2017). Therefore, in this situation the major strength is developing new product to attract the
existing one and drawback is that contains more risk in increasing the market share.
Advantage- The benefit of product development is that it develops a tradition of
innovation.
Disadvantage- The major drawback of product development is that after many hours
spend on testing there is a risk of failing the product.
Market development stage – In this, firm create or add new geographical area or market
segments for selling the existing products. For achieving this strategy, firms includes – good
packaging, different rate policies to attract new area customers, exports goods and services,
established new distribution channel etc. This is riskier process because an organisation faces
many difficulties to understand the new markets for their current offerings (Kirshin, 2018). The
key marketing mix 'P' of this is place where company wants to promotes their product lines by
using different channels.
Advantages- The benefits of market development is increased revenue, attracts new
customers for the existing offerings.
Disadvantage- the barrier that comes in market development is entering into the new
market is always create risk a of failure.
Diversification – This is the final and last strategy of Ansoff matrix where an association
innovate new product and introduce it in new market. It is more risky since it introduce brand-
new product for the new market which is referred to 'suicide cell' for every business. There are
two types of diversification i.e. related and unrelated (Barber, Metcalfe and Porteous, 2016).
When the industry remains familiar to customers is called related and if the firms is different and
no relation with old commercial enterprise than it is called unrelated. For example- Ella's kitchen

brands Ltd., manufactures organic baby products and drinks now deals organic foods for adults
that differentiate it from other firm's products that will help to stay in the market are known to
related diversification whereas, when an organisation enters in the fashion industry which is
totally different from food manufacturing for customers is refer to unrelated market.
Advantage- Diversification helps an organisation to become a product leader in the
market.
Disadvantage- The major drawbacks in diversification process is that it contains more
risk as compare to others because in this both product and market is new and there is no surety
for success.
As per the preceding information Ella's kitchen brands Ltd. follows a product
development stage because in this a company introduce new product into existing market. Here
an organisation launch superfoods for babies in the existing market to earn more market share
(Karam and et. al., 2017). This type of foods contains more nutritional benefits with low calories
and packed with more vitamins, anti-oxidants and minerals that helps in baby growth this will
attracts parents because it provides the possible satisfaction to buy that products and helps
company to maintain a reputation as a product innovator. It also helps in facing competition
effectively which results in maximising the profits.
M1. Discuss the options for growth using a range of analytical framework
As per the above information there are several growth options which are effective to
make development and growth in the business of the company. As per Ansoff matrix, there are
different growth options like penetration, product development, market development and
diversification (Jeong and et. al., 2018). By using them the management of respective company
can accomplish the desired aims of the firm. The respective company select product development
growth strategy so that it can make growth by making innovation in its product line.
D1. Evaluate specific options and pathways for growth
Different models or conceptions provide various advantages to organisation in context of
effective direction and guidance to attain the pre- explained objectives in an effective way
(Chang and Joester, 2015). PESTEL analysis is created restrictions to small group of areas in
term of choosing big population because it may create complexities and issues within business
function. In term of growth option, company has number of options like penetration, product
development, market development, diversification. In which company select product

development strategy and the risk regarding it is that if organisation launch its new product in
market then it will not clear that customer will like product or not. It will be able to fulfil their
needs and demands.
TASK 2
P3. Assess the potential sources of funding available to businesses and discuss benefits and
drawbacks
Finance is a broad term which describes activities associated with money, debt, credits,
investment etc. Basically, finance represents management of money and process of acquiring
required funds from potential sources. Finance is the most important resource which is required
by every business to plan and execute their strategies and attaining business objectives
(Cucinotta, Nigrelli and Sfravara, 2018). Organisations or businesses can acquire funds from
several different sources, but these are categorised under two broad heads, internal and external.
The term internal sources itself describes its meaning, that these are those sources by which
funds are raised internally within organisation. Some of the internal sources of finance are
retained earnings or reserves of company, sale of asset and reduction in working capital. On the
other hand, there are external sources also, from where company can raise capital for their
operations. These sources belongs outside of an entity.
In this section of the report, sources of finance from which Ella's Kitchen can raise capital
are discussed. Moreover, the strengths and weaknesses of each method is also examined.
Bank Loans- Every bank offer loan facility to businesses and have separate department for
providing loans to small companies. Bank have some rules and set minimum criteria, the loan
applicant or entity have to qualify it for receiving loan for their business (Hu and et. al.,2018).
Ella's Kitchen can use this source of finance, also banks offer different loans such as working
capital loans, term loans etc., company can apply for it according to their preferences, needs and
suitability. Strength- Raising funds or capital from bank is a secure option for Ella's Kitchen.
Moreover, banks provides flexible repayment options with flexible interest rates,
providing ease to entity.

 Weakness- Acquiring a bank loan is a flexible process but, it is not an easy job, banks
sometimes takes a lot time in completing their formalities in order to fulfil minimal
criteria and transferring the loan amount to company (Deas and et. al., 2016).
Trade Credit- It is defined as suppliers willing and acceptance of making sales of the company
on credit. Trade credit is a method which is helpful for company to fulfil its short-term needs of
finance (Fontana and et. al., 2015). Trade credits refers to the service in which credit period
offered by supplier to the business owner at the time of making sales, they allow buyer to make
payments after a prescribed time till then, good which are sold are on credit.
 Strength- This can be a best form of acquiring short-term finance for Ella's Kitchen, also
it is a safe source as suppliers knows company's financial status and its liquidity. Weakness- Trade credits includes legal aspects and a small mistake of delay in repayment
can cause unnecessary legal charges or penalties for organisation.
Venture Capital firms- These types of firms are private and runs with motive of providing and
investing in small businesses (Grüll and et. al., 2016). Venture capitalist render funds to small
businesses for their smooth functioning and growth and only provide funds to those
organisations who are in early stages of their business activities. Venture capital firm invest in
emerging entities in exchange of their equity and ownership.
 Strength- This is the most flexible and easy source of finance for small businesses,
providing money fast for the growth of company (Cucinotta, Nigrelli and Sfravara,
2018). Also, money is received by company in series of rounds, ensuring that company is
having enough money at all times for conducting their activities. Weakness- A venture capitalist offer money or render funds to small companies in
exchange of equity and ownership. This is a drawback for company as eventually owners
will lose control on their business.
Peer to Peer Lending (P2P)/ Crowd funding- It is an easy source which enable companies to
take money or raise capital form other individuals, by removing middleman or financial
institutions (Fontana and et. al., 2015). This form of funding is also known as Crowd lending or
Social funding Strength- Company gets more accessible sources of funding rather than taking
conventional loans from other financial institutions.

 Weakness- Some jurisdictions do not approve peer to peer lending, which is one of its
biggest drawback. Also, if it is allowed the company which is providing this service has
to comply with investment regulations and laws.
M2. Evaluation of potential sources of funding and justification for adoption of an effective
source
From the above defined diverse sources of fund, bank loan is an effective source of fund
to Ella's Kitchen because, it help company in acquiring the facility of funding till long term at
less rate of interest (Grüll and et. al., 2016). So that they can develop their product development
option by manufacturing superfood in effective manner. Another option crowd funding and peer
to peer lending is good because there is less interest rate and there is not any kind of long
process. So organisations can easily raise fund and choose these funding options.
D2. Critically evaluate potential sources of funding with justified argument for the adoption of a
particular source
As per above described information, bank loan is evaluated as an effective source of
funding for Ella's Kitchen. Because it have less degree of risk and also provide several benefits
in term of payment and practices between rivals (Hu and et. al., 2018). In context of bank loan, it
is analysed that there is a long process which is time consuming. Crowd funding and peer to peer
lending are good because there is no long procedure. The fund is available on less rate of interest
and small firms can easily raise fund by choosing these options.

TASK 3 & 4

Organisational background: It operates in various countries including Sweden, Belgium,
United States, China, Norway, Ireland, UK and many more. Moreover, the entity has around
30% shares in context to baby food sector of UK. In present era, Ella's Kitchen managers
has desires for enhancing market division through launching new product which is
superfoods for babies.

In demographic aspects, factors such as age, family situation, education and location are
considered. In behavioural aspects, managers considers purchasing habits, user status and
interactions of brand.

When another source that is venture capital is used then it can enjoy business expertise services.
While its disadvantage is that entity faces loss of business control and minority ownership
status. Among all, appropriate funding source for Ella's kitchen is venture capital as it
provides various additional services with funds and most flexible funding source.

They both are different from each other but experts in these areas work as a team so that a
succession plan fits like a glove over the exit option. There are various strategies that
explains both these terms are as follows.
Winding up- This strategy is follow by those organisations who face major loss in the market
and there is no scope to earns profits at this time the owner takes a decision to wind- up it.

Merger- Therefore after combining the firms, old stocks are surrendered and new stock is
issued in its place. It can be done to expand and grow into the new segment and increasing
market share.
Acquisition- It can be done between big and small size companies. For these business it is very
efficient to grow their revenue and creating innovative products.

Acquisition and merger is another option which can be use by the company in term of success
and when the company is not able to run it business then it can merge with other firm. When
the company has not sufficient resource to operate then it can chose winding up option.
Winding up is an option which is effective to exit a company in the situation when it is not able
to run the business. To make more growth and success, it can adopt merger and acquisition
option. When the company want to expand its business in another nation then it can make
merger with other well established firm and run its business. It will help in enahcing profit
and productivity of the company.

CONCLUSION
As per preceding define content, it can be summarise and conclude that to make growth
and development, the management of the company use different plan, policies, frame strategies
and implement models. So that it can gain competitive advantages from the market and it can
make development in the profit and productivity of the organisation (Deas and et. al., 2016). By
using PESTEL analysis, the company can analyse the external factors and components that affect
its business. Ansoff Matrix assist in providing information about different growth strategies
which can be adopt by the company for developing business. Different sources of fund are
available to the company from where it can raise monetary value to develop the business.
Different exit and succession options are defined in context of small business venture.

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